A commercial mortgage refinance allows property owners to replace an existing commercial loan with new financing at more favorable terms.
A commercial mortgage refinance allows a borrower to take out a new loan at a lower interest rate and use the funds from the old loan to pay off the existing balance. The lender may then sell or assign its rights to collect payments on that debt to another entity, such as an investment bank. Although commercial mortgage rates are generally higher than residential mortgages, many businesses choose a commercial mortgage refinance to improve cash flow, secure better loan terms, or reposition their property for long-term growth.
You may have lower monthly payments with a commercial loan than with your current one, which means more cash on hand for other things.
Commercial mortgages typically offer a lower rate refinance than residential mortgages because they don’t come with high risk factors.
The interest rate is often negotiable, which can make it easier to get an attractive rate even if your business credit score isn’t perfect. Refinancing at a lower rate is a great way to save money over time.
It’s more difficult to qualify for commercial banks because banks usually require a higher credit score for a commercial loan. If your business has been operating under a different name, this can be tricky to prove.
The time it takes to complete the process of applying and qualifying can be long.
It’s also important to pay close attention to the “points” that accompany the loan as well as what you’ll owe in closing costs
Commercial refinance lenders may be more likely to provide a commercial mortgage than a homeowner, and they’re often easier to qualify for.
With Commercial mortgages you can generally lower your interest rates and monthly costs by about 15%. These loans are also cheaper to the lenders themselves since the risks of default are much less.
Scalability is another aspect that many small businesses dream of. Most commercial loans offer terms as long as 30 years so if you start slowly but have big plans, this might help you out.
The following are four types of commercial property refinance loans. This is not an exclusive list, and other options include CRE refinance options for small business loans such as an SBA 504 refinance loan not found here. Other options include secured business loans.
This type of mortgage involves taking out a new loan with a different interest rate that will be used to pay off the balance on the old loan.
With this type of loan, the borrower will need to have equity in their property in order to take out a new loan, so they can use it for cash-out or build-out. The borrower will need to have enough equity in order to cover the down payment and closing costs for this kind of home mortgage refinancing.
The borrower only pays the interest on their loan, which allows them to invest the difference. This can help them pay off their existing mortgage faster or build up some equity in the property.
With this kind of loan, part is interest-only and part is paid on a fixed schedule. The borrower will need to have enough income to cover the full payment if they choose to make the interest-only payment.
Clopton Capital offers real estate financing across the U.S. for private investors and small to mid-sized real estate firms. We provide commercial mortgages, construction loans, refinancing, cash-out loans, bridge loans, and equity options. This page covers commercial refinancing.
Wondering about the basic loan fees associated with refinancing commercial loan terms? Most closing costs will be paid by the lender, but not all.
The borrower is usually responsible for what is known as “processing costs.” These are things like loan origination fees, title insurance fees, and recording fees.
It is important to understand that these fees do not always total up to be large enough to cover the cost of closing.
There are some lenders who are willing to pay these processing costs if it means they get a chance for the borrower’s business. The fee schedule should be discussed with the lender so there are no surprises at closing time. It should also be noted that you can’t get out of paying any third-party fees even if you don’t get refinanced. Fees to refinance commercial property can be significant, so be aware of them.
If you need to refinance a mortgage, the best time to do it is when interest rates are falling while your credit score and financial health are rising. This will help ensure that you can get the best deal on your new loan, taking advantage of purchase rate responsiveness.
You want to make sure that you have a good credit score so you can get refinancing at a competitive rate. You also need to be sure that your business is in good financial shape and that it has been performing well recently. If you are refinancing, there may be some fees involved with the closing costs of the new loan, but ………………..
Yes, using commercial mortgage refinancing is one of the most effective ways to lower interest rates on your original loan. By lowering the interest rate with a refinance, you can save thousands of dollars in interest fees over time.
Yes, you can use a commercial real estate financing for renovation on your commercial property. This is because the loan amount will be increased based on how much work you need done to the building and what it will cost. The lender’s approval of your construction capital does not depend on whether you will use the money for renovations or as an initial down payment.
Applying for a commercial mortgage is easier than you might think. The first thing that you have to do is to speak with a reputable bank or other lender about your request. They will need to know how much money you want, what you plan on doing with the funds once they are in your hands, and about your credit score and financials.
The requirements for refinancing commercial real estate are actually less stringent than the requirements for personal credit. Commercial borrowers usually do not need to provide income verification if their loan is large enough, generally in excess of $1 million.
When refinancing a commercial mortgage, lenders evaluate both the property and the borrower to determine structure, pricing, and proceeds. Key factors include:
Cash Flow & DSCR: The property must generate sufficient net operating income to cover debt service. Higher DSCR typically results in better rates and leverage.
Leverage (LTV): Most commercial mortgage refinances fall between 60%–75% LTV depending on asset type, market, business plan, and lender profile.
Sponsor Strength: Lenders review sponsor experience, net worth, and liquidity relative to loan size to ensure execution and ongoing performance.
Stability & Occupancy: Stabilized assets are easier to refinance, while transitional properties may require bridge or short-term structures.
Use of Proceeds: Common reasons to refinance include cash-out, maturity, rate and term improvements, or recapitalization of existing debt.
Rate & Structure: Commercial mortgage refinance rates are typically priced off SOFR or the swap curve plus a spread, with fixed or floating options and recourse or non-recourse structures.
Strong properties and experienced sponsors can often refinance at attractive terms, improve cash flow, or unlock trapped equity through cash-out proceeds.
Commercial mortgage refinance is a process by which the interest rate on a commercial loan is reduced. Contact Us – 866-647-1650
Look at the market. Interest rates are going up and experts predict they’ll continue going up reasonably soon. That means now may be the perfect time for a refinance.
Yes! Commercial properties can be refinanced much like the way that residential mortgages can be refinanced. Many of the terms, requirements, and processes involved are extremely similar to that of a residential refinance or other loan refinance process.
Commercial property owners can see substantial savings if they take the time to refinance their property. A commercial property refinancing loan is good for those with a lot of equity in the property, who want to increase their cash flow with lower interest rates, or who need to improve their business’ financial health.
Other potential candidates include commercial property owners with a lot of equity, who want to increase their cash flow, or need to improve their business’ financial health.
Commercial real estate loans are available in the United States up to the commercial property value, which is usually 80% or 90% of the home’s current appraised value. There are two types of commercial mortgages – owner-occupied and rental properties. Ownership type may be an important factor when determining eligibility for a commercial mortgage refinance.
Yes! It’s possible to use a commercial property refinance to pull equity from your property. Commercial property financing recipients can see substantial savings if they take the time to refinance their property. A commercial property refinancing loan is good for those with a lot of equity in the property, who want to increase their cash flow with lower interest rates or who need to improve their business’ financial health.
Chicago based Clopton Capital is a national commercial mortgage broker dedicated to matching borrowers interested in multifamily, industrial, commercial, & mixed-use real estate to lenders aligned exactly with their needs for asset-backed funding.
Commercial Insurance Products are offered through Clopton Insurance Services, LLC.
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